Doyen (aka Doyen Sports Investment Limited) is
nothing short of heroic in its fight against FIFA’s TPO ban. It has (sometimes
indirectly through RFC Seraing) attacked the ban in front of the French courts,
the Belgium courts, the European Commission and the Court of Arbitration for
Sport. This costly, and until now fruitless, legal battle has been chronicled
in numerous of our blogs (here
and here).
It is coordinated by Jean-Louis Dupont, a lawyer who is, to say the least, not
afraid of fighting the windmills of sport’s private regulators. Yet, this time
around he might have hit the limits of his stubbornness and legal ‘maestria’.
As illustrated by the most recent decision of the saga, rendered in March by
the Court of Arbitration for Sport (CAS) in a case opposing the Belgium club
RFC Seraing (or Seraing) to FIFA. The arguments in favour of the ban might override
those against it. At least this is the view espoused by the CAS, and until
tested in front of another court (preferably the CJEU) it will remain an influential
one. The French text of the CAS award has just been published
and I will take the opportunity of having for once an award in my native
language to offer a first assessment of the CAS’s reasoning in the case,
especially with regard to its application of EU law.

I.
The facts and procedure of the case

To cut a relatively long story
short, RFC Seraing [the variation of the name of the club remains a disturbing
mystery in the various proceedings in Belgium and at FIFA] entered a TPO
agreement with Doyen on 30 January 2015, stipulating that the club transfers
the economic rights of three players to Doyen against a sum of €300.000. At
that time the transitory phase of FIFA’s TPO ban enshrined in art. 18ter RSTP
was already in force and the FIFA TMS, tasked with monitoring the enforcement
of the RSTP, quickly jumped on the matter. The issue was referred to FIFA’s
Disciplinary Committee, which opened on 2 July 2015 proceedings against RFC
Seraing for breaching arts. 18bis and 18ter RSTP. Additionally, on 7 July 2015,
Seraing introduced in the TMS a request to recruit a Portuguese player, to
which it attached an ERPA (on Doyen’s ERPAs see our blog here) attributing 25%
of the economic rights attached to the player to Doyen against a payment of €50
000. A few days after, the FIFA TMS started another investigation into the
transfer and on 21 July 2015 the FIFA Disciplinary Committee extended the
existing proceedings to also cover this matter.

On 4 September 2015, the Disciplinary
Committee rendered its (unpublished) decision
finding that ‘FC Seraing’ breached arts. 18bis and 18ter RSTP. Consequently, it
banned the club from recruiting players (at national and international level)
for the next four transfer windows and handed out a fine of CHF 150.000.
Seraing challenged the decision with FIFA’s Appeal Committee, which decided
on 7 January 2016 to reject the appeal and confirmed the original decision. Eventually,
Seraing appealed this decision to the CAS, leading to the latest award. As a
side note, it feels like the disputes involving RFC Seraing (or FC Seraing or
Seraing United) are a set-up prompted by Doyen to be able to challenge the
validity of art. 18ter RSTP in various jurisdictions. If it were true it should
not affect the question of the legality of the ban, but it is probably not of
great support to the credibility of some arguments raised by Doyen, or its alter ego Seraing, in these proceedings.

II.
The CAS’ assessment of the
compatibility of FIFA’s TPO ban under EU law

As the competence of CAS in this
matter was not contested, the key question was against which law(s) should the
compatibility of FIFA’s TPO ban be assessed. Due to the history of RFC
Seraing’s key lawyer, it is no surprise that much of the award is spent
assessing the EU law compatibility of the ban. In the past, as I have argued
elsewhere (my CAS and EU law article is accessible for free here,
download it now!), the CAS has been rather reluctant to apply EU law rigorously.
This case is therefore a great opportunity to assess whether it has raised its standards
in this regard.

a.
The applicability of EU law

First, is EU law applicable to the
case? The CAS has rarely applied EU law (the exception confirming the rule
being the rather old CAS 98/200case, which was later challenged in
front of the EU Commission leading to the ENIC
decision), an absurdity in light of the Bosman
(and prior Walrave)
case law of the CJEU, which made clear that EU law is applicable to the
regulations of Sports Governing Bodies (SGBs), even when seated outside of the
EU. Additionally, in light of the centrality of the free movement rights in EU
integration, it is to be expected that like the EU competition rules they be
considered part and parcel of a European public policy with which arbitral
awards must comply to be recognized and enforced by national courts in the EU.

Thus, the less spectacular, but
probably more important, aspect of the award is the clear affirmation that EU
law is applicable because it constitutes a “mandatory provision of foreign law”
in the sense of art. 19 of the Swiss
Federal Act on Private International Law (PILA).[1]
Mandatory provisions of foreign law must be taken into account when three
cumulative conditions prevail:

Such rules belong to a special category of
norms which need to be applied irrspective of the law applicable to the
merits of the case;

there is a close connection between the
subject matter of the dispute and teh territory where the mandatory rules
are in force;

in view of Swiss legal theory and
practice, the mandatory rules must aim to protect legitimate interest and
crucial values and their application must lead to a decision which is
appropriate.[2]

In this
case, the Panel considers that the three cumulative conditions are fulfilled
because:

EU competition law and EU provisions on
fundamental freedoms are largely regarded as pertaining to the category of
mandatory rules by courts and scholars within the EU;

the close connections between (a) the
territory on which EU competition law and EU provisions on fundamental freedoms
are in force and (b) the subject matter of the dispute results from the
fact that the challenge against the legality of the RSTP has an obvious
impact on the EU territory. Indeed, the RSTP aims to regulate the activity
of football clubs, many of which are European. Furthermore, the particular
decision affects the participation of RFC Seraing to competitions taking
place on the European soil.

Finally, the Swiss legal system shares the
interests and values protected by EU law, specifically by the EU
competition rules and EU fundamental freedoms.[3]

This is a strong confirmation that
EU law (mainly EU free movement rights and EU competition law), which applies
almost naturally to decisions and regulations of the SGBs[4],
will always be deemed applicable if invoked in front of the CAS to challenge
their legality. This, as Seraing has learned in the present instance, does not
mean that the SGBs rules will be automatically found incompatible with EU law. Instead,
it merely subjects them to a duty of justification and proportionality, which
will be assessed on a case-by-case basis.[5]
The message for sports lawyers appearing in front of the CAS is then: Work hard
on your EU law! But don’t get your hopes up too high…

b.
The compatibility of FIFA’s TPO ban with EU law

The rest of the CAS award is mainly
dedicated to assessing the compatibility of the TPO ban with EU law.[6]
In doing so, the CAS, rightly in my view, considered that the conditions
regarding the compatibility, or not, of a private regulation of an SGB with the
EU free movement rights and competition rules overlap with regard to the key
question: the proportionality of the rule.

The legitimacy of the objectives of
the TPO ban

The Panel’s assessment focuses firstly,
and therefore mainly, on a possible disproportionate restriction of the free movement of capital guaranteed
under art. 63 TFEU. The Panel decides to assume, without addressing it, that
article 63 applies horizontally. This is still a widely uncharted territory and
the CJEU has yet to take a clear stand on it. However, the CAS decided to be
better safe than sorry and, thus, followed a maximalist interpretation of the
scope of application of the article by applying it horizontally to the rules of
FIFA. From the outset, it is uncontested that articles 18bis and 18ter RSTP
constitute a restriction to the free movement of capital in the EU.[7]
Yet, as emphasized by the Panel, a restriction does not entail an automatic
incompatibility with EU law. Instead, the restrictive effect might be justified
by a legitimate objective and compatible with EU law if the rule or measure is a
proportionate mean to attain that objective. In the present case, FIFA invoked
a number of potential legitimate objectives underlying the TPO ban:

The preservation of the contractual
stability;

The preservation of the independence
and autonomy of clubs in the management of their recruitment policy;

The securing of the integrity of
football and preservation of the loyalty and equity of competitions;

The prevention of conflicts of
interests and the securing of transparency in the transfer market.[8]

Those objectives remained
uncontested by Seraing and the Panel concluded that they could be deemed
legitimate in the sense of the CJEU’s jurisprudence.[9]
Instead, Seraing tried to argue that the ‘real’ objective of FIFA in adopting
the TPO ban was to ensure that the clubs monopolize the financial streams
generated by the transfers of players.[10]
Yet, it failed to provide the necessary evidence to convince the Panel, which
insisted that “TPO has triggered amongst many commentators and inside the
various instances and organisations of football intense worries to which the
objectives invoked by FIFA are a response”[11].
Additionally, the Panel considers “that this practice gives way to numerous
risks, in particular: risks linked to the opacity of investors escaping the
control of football organizations and who are able to freely sell-on their
investment; risks of a restriction of the economic freedom and rights of
players, through the influencing with a speculative interest of their transfer;
risks of conflicts of interests, or even of rigging or manipulation of games,
contrary to the integrity of competitions, as the same investor can have TPO
deals and multiples clubs involved in the same competition; risks linked to the
ethics of sport because the objective pursued by investors is purely a
financial and speculative one, to the detriment of sportive and moral
considerations”.[12]
Hence, the arbitrators buoyed the legitimacy of FIFA’s objectives in adopting
the TPO ban.

The proportionality of the ban

The key question is then whether the
FIFA ban can be deemed a proportionate means to attain its legitimate
objectives. It is at this most crucial stage of the evaluation of the
compatibility with EU law that a number of academic commentators have denied
the ban’s proportionality.[13]
It is the most important part of the award, which will be most likely scrutinized
and attacked in follow-up cases in front of national or European courts. It is
important to note that SGB regulations have never failed in front of the CJEU
because they were lacking a legitimate objective, but rather because they were
not considered adequate or necessary to attain their objectives. This stage of
the analysis entails political considerations and a comparative analysis of the
policy alternatives (and their feasibility) available to tackle a specific
problem. In other words, it is not sufficient to claim that you can think in
the abstract of a less restrictive alternative, you need to factually demonstrate
that this less restrictive alternative is a credible candidate to attain the
objective. This is obviously a difficult task for a lawyer. Furthermore, procedural
considerations connected to the rulemaking process will come into play. If a sporting
rule has been devised via an inclusive legislative procedure and finds broad
support amongst the affected actors, then it will in turn be more likely to be
deemed proportionate. Instead, if a rule is the result of a secretive,
exclusive and authoritarian procedure, then it will be easier to challenge its
proportionality. Thus, both substantial (effects-based) and procedural
(legitimacy-based) considerations are key to evaluate the proportionality of
the TPO ban.

The Panel
insists first that the TPO ban has limited effects on the freedom to invest in
football. Indeed, it finds that investors are not barred from investing in
clubs or to finance specific operations (such as transfers), the ban is devised
only to exclude certain types or modalities of investing.[14]
On the procedural/legislative side, the Panel notes that the ban has been
introduced after a broad consultation and on the basis of numerous, though
unpublished, expert reports.[15]
This positive assessment of the adoption process could be contested, especially
because FIFA did not release the expert reports to the public, which were
therefore not subjected to the critical scrutiny of their peers. Moreover, the Panel takes due note of the
relatively long experimentation of a lighter measure (article 18bis RSTP),
which has proven inefficient to control the widespread recourse to TPO.[16]
The question was then whether Seraing would be able to come up with a credible
less restrictive alternative to rein the anarchic use of TPO in football. The
Belgian club claimed that FIFA’s legitimate objectives could have been attained
through regulation and measures improving transparency (very similar to La
Liga’s argument here).[17]
Nonetheless, the arbitrators noted that Seraing failed to specify the
alternative measures it envisaged.[18]
Instead, the Panel sided with FIFA in finding that it lacks the capacity and
legal competence to properly police investors which are not subjected
contractually to its disciplinary power.[19]
In such a context, the Panel finds that the risks of conflicts of interests
stemming from TPO contracts cannot be properly controlled by FIFA and the
national federations, and the alternative measures proposed by Seraing are
bound to fail.[20]
Finally, the Panel also referred to the previously existing bans in France,
England and Poland, insisting that FIFA was also aiming at harmonizing the
rules applicable to the transfer market in Europe to alleviate any potential
discrimination.[21]
Hence, the arbitrators conclude that the ban is a proportionate restriction to art.
63 TFEU and compatible with EU law. While the Panel doubts that the TPO ban has
substantial restrictive effects on the free movement of players and on the
freedom to provide services of agents,[22]
in any case it refers to its findings under art. 63 TFEU to conclude that it must
be held proportionate.[23]

Regarding the compatibility of the
ban with EU competition law, Seraing argued that it constitutes an unlawful
restriction to free competition under article 101 TFEU and an abuse of a
dominant position under article 102 TFEU. The CAS deemed (uncontroversially)
FIFA an association of undertaking for the purpose of article 101 TFEU and recognized
that the TPO ban affects trade between the Member States.[24]
However, the arbitrators emphasized that Seraing bears the burden of proving
that the ban constitutes a restriction by object or effect of free competition
in the internal market.[25]
In that regard, the CAS referred to the CJEU’s analytical framework developed
in its Wouters
case.[26]
It concluded, referring to its previous holdings, that the ban had legitimate
objectives and was necessary to attain them, and therefore did not constitute a
restriction in the sense of article 101 (1) TFEU. As far as the abuse of a dominant
position is concerned, after criticizing the lack of serious economic analysis
by the appellant,[27]
the Panel simply reiterated its previous findings regarding the legitimate
objectives and proportionality of the ban.[28]

The CAS swiftly rejected all the
other arguments raised by Seraing on the basis of the EU’s Fundamental Rights
Charter,[29]
the European Convention of Human Rights,[30]
and Swiss law.[31]
Nonetheless, it did held that the sanction imposed on Seraing by the FIFA
Disciplinary Committee was too stringent in light of the proportionality
principle and reduced Seraing’s transfer ban to three windows and a fine of CHF
150.000.[32]

III.
Conclusion

Doyen lost a new battle and, while
the war is still raging on, the controversial company is slowly starting to run
out of legal ammunitions to challenge FIFA’s TPO ban. I have explained elsewhere
why I believe the ban to be compatible with EU law and many of the arguments of
the CAS in this award resonate with my own views. Yet, though I think banning TPO is a step in
the right direction to a healthier transfer market, I also believe
that FIFA is artificially sustaining a transfer market that leads to the shadowy
financiarization of football brutally exposed in the recent football leaks. In
other words, the fact that a challenge against articles 18bis or 18ter fails
does not mean that the whole RSTP is compatible with EU law, and for various
reasons I believe that the current article 17RSTP is likely to fall foul of the
EU internal market rules.[33]

The broader lesson of this TPO saga
is that EU law is (at last) becoming a potent tool to challenge SGBs and their
rules at the CAS. However, EU law is not blind to the necessary regulatory
function they exercised vis-à-vis
transnational sporting activities. What EU law targets is the SGBs’ illegitimate,
disproportionate, and abusive regulatory behaviour to the detriment of the affected
actors. When invoking EU law, sports lawyers must be aware of the need to show concretely
the disproportionate nature of the rule or decision challenged. This is a heavy
evidentiary burden. In other words, one cannot be satisfied with simply pointing
out a restrictive effect, instead an interdisciplinary engagement with the
economic and social effects of a regulation as well as with its legislative
process is in order.

On a final note, I am truly pleased
to see that the CAS is finally taking EU law a bit more seriously. This is a
giant step forward, which will protect its awards from challenges in front of
national courts, foster its reputation in Europe’s legal communities, and empower
it as a counter-power inside the system of the lex sportiva. I urge the CAS to fully embrace this change and to
continue to thoroughly assess the EU law compatibility of the sporting rules
challenged in front of it. In this regard, it should keep in mind that the more
these rules are the result of a deliberative and inclusive (in a way
democratic) transnational legislative process, the more they can be deemed
legitimate in the eyes of EU law…and vice versa.

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This blog is a knowledge hub for all things related with International Sports Law. On this page, you will find the recent developments in the field: publications, events and cases. Moreover, we will provide outstanding (short) academic commentaries on the most pressing questions in International Sports Law.